Allied Digital Services Limited

Technology — Information Technology Services · NSE

₹106.65+₹0.69 (+0.65%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:58 pm

Understanding the Business

Company site ↗

The 60-second version of Allied Digital Services Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Allied Digital Services Limited designs, develops, deploys, and delivers end-to-end IT infrastructure services and digital solutions in India, rest of Asia, the United States, Australia, Europe, and the Middle East. It operates in two segments, Services and Solutions.

IndustryInformation Technology Services

SectorTechnology

Employees2,091

Annual revenue₹967 Cr

How does it make money?

Turns over ₹967 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 2,091 employees supports ₹46.2 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹46.2 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 7.0% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE32.0%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 17.2% and earnings to grow about 9.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.2%

Est. earnings growth+9.6%

Analysts1

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +46% while net margin moved +184% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+46%

Margin effect+184%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

✗ ROCE of 7.0% is below 10% — capital is not working hard
✗ ROCE has fallen by 5.7 points — returns are eroding
• EBITDA margin of 13.6% is respectable
✗ Net margin of 2.6% is slim
• Revenue has compounded at 13.6% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

58/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

82/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

14.2x

3Y Median

32.6x

40 monthly readings · mean 55.7x · range 16.8x–177.2x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 56% below its 3y median of 32.6x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟡Against its sector it is priced broadly in line with the peer median of 16.5x.

vs. its own history

Cheap

32.6x median over 40 months · -56%

vs. sector peers

Fair

16.5x median of 4 peers · -14%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

4.6x

PEG

0.23

What's Good / What's Bad

🟢 What's Going Well3

Return on equity is rising
ROE has improved from 1.3% to 4.7%.
Very low debt
Debt/Equity of 0.20x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 12.7% to 7.0% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 148% over 3 years, from ₹55 Cr to ₹136 Cr.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Receivables growing faster than salesFinancial
Receivables up 101% against revenue up 46% — sales are being booked faster than they are collected.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 9.8x to 6.0x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹98 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 56% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 101% against revenue up 46%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
3 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 10% a year✓ 13.6% CAGR
Latest reported year was 18.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 12%✓ 13.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹98 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 7.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 2 neutral · 4 weak

Market Cap

₹604 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.2x

Cheap

Cheap against the generic band

P/B Ratio

0.98x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹7.49

Profitable

Profitable on a per-share basis

ROE

4.7%

Weak

Weak capital efficiency

ROCE

7.0%

Weak

Low return on total capital employed

Debt/Equity

0.20x

Low

Conservative leverage

Revenue Growth (YoY)

18.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-4.8%

Falling

Profits are shrinking

Dividend Yield

1.41%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹98 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

10.4x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

6.8%

Average

Average margins

Net Margin

2.6%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.52

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.69

Defensive

Steadier than the market

52W Range Position

20%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

104.9 / 106.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

37.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹660 Cr	₹687 Cr	₹806 Cr	₹967 Cr	+13.6%
EBITDA	₹93 Cr	₹84 Cr	₹114 Cr	₹132 Cr	+12.2%
EBITDA Margin	14.1%	12.2%	14.1%	13.6%	—
PAT (Net Profit)	₹7 Cr	₹41 Cr	₹28 Cr	₹29 Cr	+60.9%
EPS	₹1.23	₹7.29	₹4.91	₹6.25	+71.9%
ROE	1.3%	7.2%	4.6%	4.7%	—
ROCE	12.7%	10.3%	9.5%	7.0%	—
Total Debt	₹55 Cr	₹75 Cr	₹95 Cr	₹136 Cr	+35.3%
Free Cash Flow	₹35 Cr	₹64 Cr	₹89 Cr	-₹98 Cr	—

🟢 Revenue has grown at 13.6% a year over 3 years.

🟢 EBITDA has grown at 12.2% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 13.6% over 3 years.

🟢 PAT (Net Profit) has grown at 60.9% a year over 3 years.

🟢 EPS has grown at 71.9% a year over 3 years.

🟢 ROE has risen from 1.3% to 4.7% over 3 years (+3.4 pts).

🔴 ROCE has fallen from 12.7% to 7.0% over 3 years (-5.7 pts).

🔴 Total Debt has grown at 35.3% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹35 Cr to -₹98 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,058 Cr

Total Liabilities

₹387 Cr

Cash & Equivalents

₹134 Cr

Operating Cash Flow

-₹79 Cr

Capex

-₹19 Cr

Shareholding (proxy)

Institutional Holding

0.1%

Insider Holding

54.4%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

28 Aug 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹125

+17.2% vs CMP

Target Range

₹125 – ₹125

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 positive2 mixed3 general

Allied Digital Services Share Price rises 14.29% to Rs 110

Univest, 25 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Allied Digital Services ADSL NSE Volume Query Clarification

Kalkine India, 13 Oct

Allied Digital Services Q1FY27 Results: Revenue up 19% YoY to ₹260 crore

scanx.trade, 23 SeptResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Allied Digital Services Ltd leads gainers in 'B' group

Business Standard, 25 Sept

Allied Digital Services (NSEI:ADSL) Stock Forecast & Analyst Predictions

Simply Wall Street, 07 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Allied Digital Services Limited Actuals & Estimates (NSE:ADSL)

TradingView, 26 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Growth · Valuation

MiddlingProfitability

WeakBusiness Quality · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑